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INTRODUCTION

Perception is the process by which organisms interpret and organize sensation to produce a meaningful experience of the world. Sensation usually refers to the immediate, relatively unprocessed result of stimulation of sensory receptors in the eyes, ears, nose, tongue, or skin. Perception, on the other hand, better describes one's ultimate experience of the world and typically involves further processing of sensory input. In practice, sensation and perception are virtually impossible to separate, because they are part of one continuous process. Thus, perception in humans describes the process whereby sensory stimulation is translated into organized experience. That experience, or percept, is the joint product of the stimulation and of the process itself. Relations found between various types of stimulation (e.g., light waves and sound waves) and their associated percepts suggest inferences that can be made about the properties of the perceptual process; theories of perceiving then can be developed on the basis of these inferences. Because the perceptual process is not itself public or directly observable (except to the perceiver himself, whose percepts are given directly in experience), the validity of perceptual theories can be checked only indirectly. Historically, systematic thought about perceiving was the province of philosophy. Philosophical interest in perception stems largely from questions about the sources and validity of what is called human knowledge (epistemology). Epistemologists ask whether a real, physical world exists independently of human experience and, if so, how its properties can be learned and how the truth or accuracy of that experience can be determined. They also ask whether there are innate ideas or whether all experience originates through contact with the physical world, mediated by the sense organs. As a scientific enterprise, however, the investigation of perception has especially developed as part of the larger discipline of psychology. For the most part, psychology bypasses the questions about perceiving raised by philosophy in favors of problems that can be handled by its special methods. The remnants of such philosophical questions, however, do remain; researchers are still concerned, for example, with the relative contributions of innate and learned factors to the perceptual process. Such fundamental philosophical assertions as the existence of a physical world, however, are taken for granted among most scientific students of perceiving. Typically, researchers in perception simply accept

the apparent physical world particularly as it is described in those branches of physics concerned with electromagnetic energy, optics, and mechanics. The problems they consider relate to the process whereby percepts are formed from the interaction of physical energy (for example, light) with the perceiving organism. Of further interest is the degree of correspondence between percepts and the physical objects to which they ordinarily relate. In philosophy, psychology, and cognitive science, perception is the process of attaining awareness or understanding of sensory information. The word "perception" comes from the Latin words perceptio, percipio, and means "receiving, collecting, action of taking possession, apprehension with the mind or senses. Perception is one of the oldest fields in psychology. The oldest quantitative law in psychology is the Weber-Fetcher law, which quantifies the relationship between the intensity of physical stimuli and their perceptual effects. The study of perception gave rise to the Gestalt school of psychology, with its emphasis on holistic approach.

Types of Perception:Two types of consciousness are considerable regarding perception: Phenomenal (any occurrence that is observable and physical) and Psychological. The difference every sighted person can demonstrate to him- or herself is by the simple opening and closing of his or her eyes: phenomenal consciousness is thought, on average, to be predominately absent without senses such as sight. Through the full or rich sensations present in senses such as sight, nothing by comparison is present while the senses are not engaged, such as when the eyes are closed. Using this precept, it is understood that, in the vast majority of cases, logical solutions are reached through simple human sensation. The analogy of Plato's Cave was coined to express these ideas. Passive perception can be surmised as the following sequence of events:--

Surrounding Input (senses) processing (brain) Output (re-action).

Although still supported by mainstream philosophers, psychologists and neurologists, this theory is nowadays losing momentum. The theory of active perception has emerged from extensive research of sensory illusions, most notably the works of Richard L. Gregory. This theory, which is increasingly gaining experimental support, can be surmised as dynamic relationship between "description" (in the brain) senses surrounding, all of which holds true to the linear concept of experience.

Perception and reality


In the case of visual perception, some people can actually see the percept shift in their mind's eye. Others, who are not picture thinkers, may not necessarily perceive the 'shape-shifting' as their world changes. The 'simplistic' nature has been shown by experiment: an ambiguous image has multiple interpretations on the perceptual level. The question, "Is the glass half empty or half full?" serves to demonstrate the way an object can be perceived in different ways. Just as one object can give rise to multiple percepts, so an object may fail to give rise to any percept at all: if the percept has no grounding in a person's experience, the person may literally not perceive it. The processes of perception routinely alter what humans see. When people view something with a preconceived concept about it, they tend to take those concepts and see them whether or not they are there. This problem stems from the fact that humans are unable to understand new information, without the inherent bias of their previous knowledge. A persons knowledge creates his or her reality as much as the truth, because the human mind can only contemplate that to which it has been exposed. When objects are viewed without understanding, the mind will try to reach for something that it already recognizes, in order to process what it is viewing. That which most closely relates to the unfamiliar from our past experiences, makes up what we see when we look at things that we dont comprehend. This confusing ambiguity of perception is exploited in human technologies such as camouflage, and also in biological mimicry, for example by European Peacock butterflies, whose wings bear eye markings that birds respond to as though they were the eyes of a dangerous predator. Perceptual ambiguity is not restricted to vision. For example, recent touch perception research Robles-De-La-Torre & Hayward 2001 found that kinesthesia based haptic perception strongly relies on the forces experienced during touch. Cognitive theories of perception assume there is a poverty of stimulus. This (with reference to perception) is the claim that sensations are, by themselves, unable to provide a unique description of the world. Sensations require 'enriching', which is the role of the mental model. A different type of

theory is the perceptual ecology approach of James J. Gibson. Gibson rejected the assumption of a poverty of stimulus by rejecting the notion that perception is based in sensations. Instead, he investigated what information is actually presented to the perceptual systems. He and the psychologists who work within this paradigm detailed how the world could be specified to a mobile, exploring organism via the lawful projection of information about the world into energy arrays. Specification is a 1:1 mapping of some aspect of the world into a perceptual array; given such a mapping, no enrichment is required and perception is direct perception. Preconceptions can influence how the world is perceived. For example, one classic psychological experiment showed slower reaction times and less accurate answers when a deck of playing cards reversed the color of the suit symbol for some cards (e.g. red spades and black hearts). There is also evidence that the brain in some ways operates on a slight "delay", to allow nerve impulses from distant parts of the body to be integrated into simultaneous signals.

Perception-in-action
An ecological understanding of perception derived from Gibson's early work is that of "perception-inaction", the notion that perception is a requisite property of animate action; that without perception action would be unguided, and without action perception would serve no purpose. Animate actions require both perception and motion, and perception and movement can be described as "two sides of the same coin, the coin is action". Gibson works from the assumption that singular entities, which he calls "invariants", already exist in the real world and that all that the perception process does is to home in upon them. A view known as constructivism (held by such philosophers as Ernst von Glasersfeld) regards the continual adjustment of perception and action to the external input as precisely what constitutes the "entity", which is therefore far from being invariant. Glasersfeld considers an "invariant" as a target to be homed in upon, and a pragmatic necessity to allow an initial measure of understanding to be established prior to the updating that a statement aims to achieve. The invariant does not and need not represent an actuality, and Glasersfeld describes it as extremely unlikely that what is desired or feared by an organism will never suffer change as time goes on. This social constructionist theory thus allows for a needful evolutionary adjustment. A mathematical theory of perception-in-action has been devised and investigated in many forms of controlled movement, and has been described in many different species of organism using the General

Taw Theory. According to this theory, taw information, or time-to-goal information is the fundamental 'percept' in perception.

Theories of Perception
Two major classes: Bottom-up: perception builds up hierarchically from a set of primitive "features" to our internal representations. Top-down: perception starts with a set of primitives, but our perceptual experience is influenced by higher-level processes, such as knowledge and context.

Bottom-up theories
All bottom-up theories rely on the notion that perception builds upwards from a foundation of primitives to a representation our cognitive system can use. This takes place without any influence from higher cognitive processes. Five main theories are as follows:-

Direct perception Precursor to behaviorism Perception is a direct result of stimulus energy affecting receptor cells. No higher cognitive processes or internal representations are necessary

Template/Exemplar theory We store examples of all the objects we have seen as exemplars or templates. We compare a perceived object to this set of exemplars until we find a match. Proto type theory Instead of storing many exemplars or rigid templates, we store a prototype, which is kind of like the average of an object. We compare a perceived object to these prototypes until we find the closest match.

Feature theory Perception starts with the identification of basic features that are put together into more complex objects, which are put together into more complex objects, etc. until we identify an object. Example: Pandemonium

Structural description theory Kind of like a three-dimensional version of feature theory, where rather than having lines and corners as the basic features, simple geometric shapes, called geons, are the basic features. We recognize objects by matching the geons we are looking at to the stored geons in memory.

Top-down theories

Top-down theories posit varying degrees of influence of higher cognitive processes on what we actually perceive. The primary example of this is the effect of context on perception, such as in the Word Superiority Effect.

THE HISTORY OF INDIAN INSURANCE INDUSTRY


The story of insurance is probably as old as the story of mankind. The same instinct that prompts modern businessmen today to secure themselves against loss and disaster existed in primitive men also. They too sought to avert the evil consequences of fire and flood and loss of life and were willing to make some sort of sacrifice in order to achieve security. Though the concept of insurance is largely a development of the recent past, particularly after the industrial era past few centuries yet its beginnings date back almost 6000 years.

Life Insurance
In 1818 the British established the first insurance company in India in Calcutta, the Oriental Life Insurance Company. First attempts at regulation of the industry were made with the introduction of the Indian Life Assurance Companies Act in 1912. A number of amendments to this Act were made until the Insurance Act was drawn up in 1938. Noteworthy features in the Act were the power given to the Government to collect statistical information about the insured and the high level of protection the Act gave to the public through regulation and control. When the Act was changed in 1950, this meant far reaching changes in the industry. The extra requirements included a statutory requirement of a certain level of equity capital, a ceiling on share holdings in such companies to prevent dominant control (to protect the public from any adversarial policies from one single party), stricter control on investments and, generally, much tighter control. In 1956, the market contained 154 Indian and 16 foreign life insurance companies. Business was heavily concentrated in urban areas and targeted the higher echelons of society. Unethical practices adopted by some of the players against the interests of the

consumers then led the Indian government to nationalize the industry. In September 1956, nationalization was completed, merging all these companies into the so-called Life Insurance Corporation (LIC). It was felt that nationalization has lent the industry fairness, solidity, growth and reach.

Insurance may be described as a social device to ensure protection of economic value of life and other assets. Under the plan of insurance, a large number of people associate themselves by sharing risks attached to individuals. The risks, which can be insured against, include fire, the perils of sea, death and accidents and burglary. Any risk contingent upon these, may be insured against at a premium commensurate with the risk involved. Thus collective bearing of risk is insurance. Insurance is a contract whereby, in return for the payment of premium by the insured, the insurers pay the financial losses suffered by the insured as a result of the occurrence of unforeseen events. The term "risk" is used to describe the possibility of adverse results flowing from any occurrence or the accidental happenings, which produce a monetary loss. Insurance is a pool in which a large number of people exposed to a similar risk make contributions to a common fund out of which the losses suffered by the unfortunate few, due to accidental events, are made good. The sharing of risk among large groups of people is the basis of insurance. The losses of an individual are distributed over a group of individuals.

Definitions: General definition:


In the words of John Magee, Insurance is a plan by themselves which large number of people associate and transfer to the shoulders of all, risks that attach to individuals.

Fundamental definition:
In the words of D.S. Hansell, Insurance accumulated contributions of all parties participating in the scheme.

Contractual definition:
given contingency.

In the words of justice Tindall, Insurance is a contract in which a sum of

money is paid to the assured as consideration of insurers incurring the risk of paying a large sum upon a

Characteristics of insurance
Sharing of risks Cooperative device Evaluation of risk Payment on happening of a special event The amount of payment depends on the nature of losses incurred. The success of insurance business depends on the large number of people insured against similar risk. Insurance is a plan, which spreads the risk and losses of few people among a large number of people. The insurance is a plan in which the insured transfers his risk on the insurer. Insurance is a legal contract which is based upon certain principles of insurance which includes utmost good faith, insurable interest, contribution, indemnity, causes proxima, subrogation, etc. The scope of insurance is much wider and extensive.

Functions of insurance: Primary functions:


1. Provide protection: - Insurance cannot check the happening of the risk, but can provide for the losses of risk. 2. Collective bearing of risk: - Insurance is a device to share the financial losses of few among many others. 3. Assessment of risk: - Insurance determines the probable volume of risk by evaluating various factors that give rise to risk. 4. Provide certainty: - Insurance is a device, which helps to change from uncertainty to certainty.

Secondary functions:
1. Prevention of losses: - Insurance cautions businessman and individuals to adopt suitable device to prevent unfortunate consequences of risk by observing safety instructions. 2. Small capital to cover large risks: - Insurance relives the businessman from security investment, by paying small amount of insurance against larger risks and uncertainty. 3. Contributes towards development of larger industries.

Other Function:
Means of savings and investment: Insurance companies are business houses. The product they sell is financial protection. To succeed and survive, they must cover their costs, which include payments to cover the losses of policyholders, as well as sales and administrative expenses, taxes and dividends.

Insurance companies have two sources of income for covering these costs: Premiums and

Investment income. The premiums are collected on a regular basis and invested in Government Bonds, Gilt, stocks, mutual funds, real estates and other conservative avenues. However, investment income depends on market conditions, interest rates, economy etc. and varies from year to year. Because of the uncertainty associated with the investment income, insurance companies must generate enough income from premiums to cover the bulk of their expenses.

Some of the important milestones in the life insurance business in India are:
1818: Oriental Life Insurance Company, the first life insurance company on Indian soil started functioning.
1870: Bombay Mutual Life Assurance Society, the first Indian life 'Insurance Company business, started 'Its

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life 'Insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical 'Information about both life and non life insurance businesses. 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the 'Interests of the insuring pubic.
1956: 245 Indian and foreign insurance and provident societies are taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 chores from the Government of India.

Liberalization of Indian Insurance

1994: Insurance sector invited private participation to induce a spirit of competition amongst the various insurers and. to provide a choice to the consumers. 1997: Insurance regulator IRDA was set up as there felt the Feed:

To set up an independent regulatory body, that provides greater autonomy to insurance companies in order to improve their performance, In the first year of insurance market liberalization (2001) as much as 16 private sector companies including joint ventures with leading foreign insurance companies have entered the Indian insurance sector. Of this, 10 were under the life insurance category and six under general insurance. Thus in all there are 25 players (12-life insurance and l3-general insurance) in the Indian insurance industry till date.

Players in Indian insurance industry Life insurers


Insurance industry, as on 1.4.2000, comprised mainly two players: the state insurers:

Life Insurance Corporation of India (LIC)

General insurers:
General Insurance Corporation of India (GIC) with effect from Dec'2000, a National Reinsure
GIC had four subsidiary companies, namely with effect from Dec'2000, these subsidiaries have been delinked from the parent company and made as independent insurance companies. 1. The Oriental Insurance Company Limited 2. The New India Assurance Company Limited, 3. National Insurance Company Limited 4. United India Insurance Company Limited.

Yr: 2000-2007: Insurance Industry in the year 2009-2010 had 15 new entrants, namely:

Life Insurers:
S.No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Name of the Company Max New York Life Insurance Co. Ltd. HDFC Standard Life Insurance Company Ltd. ICICI Prudential Life Insurance Company Ltd. Om Kotak Mahindra Life Insurance Co. Ltd. Birla Sun Life Insurance Company Ltd. Tata AIG Life Insurance Company Ltd. SBI Life Insurance Company Limited ING Vysya Life Insurance Company Private Limited Allianz Bajaj Life Insurance Company Ltd. MetLife India Insurance Company Pvt. Ltd. Reliance Life Insurance Company Ltd. Shriram Life Insurance Company Ltd. Sahara India Life Insurance Company Ltd. Bharti AXA Life Insurance Company Ltd. Aviva Life Insurance Company Ltd.

General Insurers:
S.No. 1 2 3 4 5 6 Name of the Company Royal Sundaram Alliance Insurance Company Limited Reliance General Insurance Company Limited. IFFCO Tokyo General Insurance Co. Ltd TATA AIG General Insurance Company Ltd. Bajaj Allianz General Insurance Company Limited ICICI Lombard General Insurance Company Limited.

ADVANTAGES OF LIFE INSURANCE

1. It is superior to an ordinary saving plan: - Unlike other saving plans, if affords full protection against risk of death. In case of death, the full sum assured is made available under a life assurance policy; whereas under saving scheme the total accumulated saving alone will be available. The later will be considerable less than the sum assured, if death occurs during early years.

2. Easy settlement & protection against creditors: - The life assured can name person(s) called Nominee to whom the policy money would be payable in the event of his death. The proceeds of a life policy can be protected against the claim of the creditors of the life assured by effecting a valid assignment of the policy.

3. Ready marketability & suitability for quick borrowing: - After an initial period, if the policyholder finds him unable to continue payment of premiums, he can surrender the policy for a cash sum. Alternatively, he can tide over a temporary difficulty by taking loan on the sole security of the policy without delay. Further, a life insurance policy is sometimes acceptable as security for a commercial loan.

4. Tax Relief: - The Indian Income-Tax allows deduction of certain portion of the taxable income, which is diverted to payment of life insurance premiums from the total income tax liability. When this tax relief is taken into account, it will be found that the assured is in effect paying a lower premium for his insurance.

Need for insurance

To provide cash to meet various routine expenses of the family on or immediately after the death of the income earner of the family. To preserve the familys accustomed standard of living ever after the death of the breadwinner. To provide continuous flow of funds for the living spouse. To allocate income funds for the childrens education. To provide a retirement income throughout old age. To provide a reliable savings plan for the future. To supplement income when earning power is reduced or eroded by illness, accident or any handicap. To furnish surplus earnings for the investors should disaster strike.

7 ps of insurance sector:

7 Ps Of Insurance Sector
Product Promotions Pricing

Physical Evidence

Place

People

Process

Wherever there is uncertainty there is risk. We do not have any control over uncertainties which involves financial losses. The risks may be certain events like death, pension, retirement or uncertain events like theft, fire, accident, etc.

Insurance is a financial service for collecting the savings of the public and providing them with risk coverage. The main function of Insurance is to provide protection against the possible chances of generating losses. It eliminates worries and miseries of losses by destruction of property and death. It also provides capital to the society as the funds accumulated were invested in productive heads. Insurance comes under the service sector and while marketing this service, due care is to be taken in quality product and customer satisfaction. While marketing the services, it is also pertinent that they think about the innovative promotional measures. It is not sufficient that you perform well but it is also important that you let others know about the quality of your positive contributions. The creativity in the promotional measures is the need of the hour. The advertisement, public relations, word of mouth communication needs due care and personal selling requires intensive care. INSURANCE MARKETING: The term Insurance Marketing refers to the marketing of Insurance services with the aim to create customer and generate profit through customer satisfaction. The

Insurance Marketing focuses on the formulation of an ideal mix for Insurance business so that the Insurance organization survives and thrives in the right perspective. MARKETING --MIX FOR INSURANCE COMPANIES: The marketing mix is the combination of marketing activities that an organization engages in so as to best meet the needs of its targeted market. The Insurance business deals in selling services and therefore due weight-age in the formation of marketing mix for the Insurance business is needed. The marketing mix includes sub-mixes of the 7 P's of marketing i.e. the product, its price, place, promotion, people, process & physical attraction. The above mentioned 7 P's can be used for marketing of Insurance products, in the following manner:

1. Product:
A product means what we produce. If we produce goods, it means tangible product and when we produce or generate services, it means intangible service product. A product is both what a seller has to sell and a buyer has to buy. Thus, an Insurance company sells services and therefore services are their product.

In India, the Life Insurance Corporation of India (LIC) and the General Insurance Corporation (GIC) are the two leading companies offering insurance services to the users. Apart from offering life insurance policies, they also offer underwriting and consulting services. When a person or an organization buys an Insurance policy from the insurance company, he not only buys a policy, but along with it the assistance and advice of the agent, the prestige of the insurance company and the facilities of claims and compensation. It is natural that the users expect a reasonable return for their investment and the insurance companies want to maximize their profitability. Hence, while deciding the product portfolio or the product-mix, the services or the schemes should be motivational. The Group Insurance scheme is required to be promoted, the Crop Insurance is required to be expanded and the new schemes and policies for the villagers or the rural population are to be included. The Life Insurance Corporation has intensified efforts to promote urban savings, but as far as rural savings are concerned, it is not that impressive. The introduction of Rural Career Agents Scheme has been found instrumental in inducing the rural prospects but the process is at infant stage and requires more professional excellence. The policy makers are required to activate the efforts. It would be prudent that the LIC is allowed to pursue a policy of direct investment for rural development. Investment in Government securities should be stopped and the investment should be

canalized in private sector for maximizing profits. In short, the formulation of product-mix should be in the face of innovative product strategy. While initiating the innovative process it is necessary to take into consideration the strategies adopted by private and foreign insurance companies.

2. Pricing:
In the insurance business the pricing decisions are concerned with: i) The premium charged against the policies, ii) Interest charged for defaulting the payment of premium and credit facility, and iii) Commission charged for underwriting and consultancy activities. With a view of influencing the target market or prospects the formulation of pricing strategy becomes significant. In a developing country like India where the disposable income in the hands of prospects is low, the pricing decision also governs the transformation of potential policyholders into actual policyholders. The strategies may be high or low pricing keeping in view the level or standard of customers or the policyholders. The pricing in insurance is in the form of premium rates. The three main factors used for determining the premium rates under a life insurance plan are mortality, expense and interest. The premium rates are revised if there are any significant changes in any of these factors.

Mortality (deaths in a particular area): When deciding upon the pricing strategy the average rate of mortality is one of the main considerations. In a country like South Africa the threat to life is very important as it is played by host of diseases.

Expenses: The cost of processing, commission to agents, reinsurance companies as well as registration are all incorporated into the cost of installments and premium sum and forms the integral part of the pricing strategy Interest: The rate of interest is one of the major factors which determine people's willingness to invest in insurance. People would not be willing to put their funds to invest in insurance business if the interest rates provided by the banks or other financial instruments are much greater than the perceived returns from the insurance premiums.

3. Place:
This component of the marketing mix is related to two important facets --

i) Managing the insurance personnel, and ii) Locating a branch. The management of agents and insurance personnel is found significant with the viewpoint of maintaining the norms for offering the services. This is also to process the services to the end user in such a way that a gap between the services- promised and services -- offered is bridged over. In a majority of the service generating organizations, such a gap is found existent which has been instrumental in making worse the image problem. The transformation of potential policyholders to the actual policyholders is a difficult task that depends upon the professional excellence of the personnel. The agents and the rural career agents acting as a link, lack professionalism. The front-line staff and the branch managers also are found not assigning due weight-age to the degeneration process. The insurance personnel if not managed properly would make all efforts insensitive. Even if the policy makers make provision for the quality upgrading the promised services hardly reach to the end users.

It is also essential that they have rural orientation and are well aware of the lifestyles of the prospects or users. They are required to be given adequate incentives to show their excellence. While recruiting agents, the branch managers need to prefer local persons and provide them training and conduct seminars. In addition to the agents, the front-line staff also needs an intensive training program to focus mainly on behavioral management. Another important dimension to the Place Mix is related to the location of the insurance branches. While locating branches, the branch manager needs to consider a number of factors, such as smooth accessibility, availability of infrastructural facilities and the management of branch offices and premises. In addition it is also significant to provide safety measures and also factors like office furnishing, civic amenities and facilities, parking facilities and interior office decoration should be given proper attention. Thus the place management of insurance branch offices needs a new vision, distinct approach and an innovative style. This is essential to make the work place conducive, attractive and proactive for the generation of efficiency among employees. The branch managers need professional excellence to make place decisions productive.

4. Promotion:
The insurance services depend on effective promotional measures. In a country like India, the rate of illiteracy is very high and the rural economy has dominance in the national economy. It is essential to have both personal and impersonal promotion strategies. In promoting insurance business, the agents and the rural career agents play an important role. Due attention should be given in selecting the promotional tools for agents and rural career agents and even for the branch managers and front line staff. They also have to be given proper training in order to create impulse buying. Advertising and Publicity, organization of conferences and seminars, incentive to policyholders are impersonal communication. Arranging Kirtans, exhibitions, participation in fairs and festivals, rural wall paintings and publicity drive through the mobile publicity van units would be effective in creating the impulse buying and the rural prospects would be easily transformed into actual policyholders.

5. People:
Understanding the customer better allows designing appropriate products. Being a service industry which involves a high level of people interaction, it is very important to use this resource efficiently in order to satisfy customers. Training, development and strong relationships with intermediaries are the key areas to be kept under consideration. Training the employees, use of IT for efficiency, both at the staff and agent level, is one of the important areas to look into.

6. Process:
The process should be customer friendly in insurance industry. The speed and accuracy of payment is of great importance. The processing method should be easy and convenient to the customers. Installment schemes should be streamlined to cater to the ever growing demands of the customers. IT & Data Warehousing will smoothen the process flow. IT will help in servicing large no. of customers efficiently and bring down overheads. Technology can either complement or supplement the channels of distribution cost effectively. It can also help to improve customer service levels. The use of data warehousing management and mining will help to find out the profitability and potential of various customers product segments.

7. Physical evidence:
Distribution is a key determinant of success for all insurance companies. Today, the nationalized insurers have a large reach and presence in India. Building a distribution network is very expensive and time consuming. If the insurers are willing to take advantage of India's large population and reach a profitable mass of customers, then new distribution avenues and alliances will be necessary. Initially insurance was looked upon as a complex product with a high advice and service component. Buyers prefer a face-to-face interaction and they place a high premium on brand names and reliability. As the awareness increases, the product becomes simpler and they become off-the-shelf commodity products. Today, various intermediaries, not necessarily insurance companies, are selling insurance. For example, in UK, retailer like Marks & Spencer sells insurance products. The financial services industries have successfully used remote distribution channels such as telephone or internet so as to reach more customers, avoid intermediaries, bring down overheads and increase profitability. A good example is UK insurer Direct Line. It relied on telephone sales and low pricing. Today, it is one of the largest motor insurance operators. Technology will not replace a distribution network though it will offer advantages like better customer service. Finance companies and banks can emerge as an attractive distribution channel for insurance in India. In Netherlands, financial services firms provide an entire range of products including bank accounts, motor, home and life insurance and pensions. In France, half of the life insurance sales are made through banks. In India also, banks hope to maximize expensive existing networks by selling a range of products. It is anticipated that rather than formal ownership arrangements, a loose network of alliance between insurers and banks will emerge, popularly known as bank assurance. Another innovative distribution channel that could be used are the non-financial organizations. For an example, insurance for consumer items like fridge and TV can be offered at the point of sale. This increases the likelihood of insurance sales. Alliances with manufacturers or retailers of consumer goods will be possible and insurance can be one of the various incentives offered.

Various types of life insurance policies: Endowment policies: This type of policy covers risk for a specified period, and at the end of the maturity sum assured is paid back to policyholder with the bonuses during the term of the policy. Money back policies: This type of policy is for periodic payments of partial survival benefits during the term of the policy as long as the policy holder is alive. Group insurance: This type of insurance offers life insurance protection under group policies to various groups such as employers-employees, professionals, co-operatives etc it also provides insurance coverage for people in certain approved occupations at the lowest possible premium cost. Term life insurance policies: This type of insurance covers risk only during the selected term period. If the policy holder survives the term, risk cover comes to an end. These types of policies are for those people who are unable to pay larger premium required for endowment and whole life policies. No surrender, loan or paid up values are in such policies. Whole life insurance policies: This type of policy runs as long as the policyholder is alive and is covered for the entire life of the policyholder. In this policy the insured amount and the bonus is payable only to nominee on the death of policy holder. Joint life insurance policies: These policies are similar to endowment policies in maturity benefits and risk cover, but joint life policies cover two lives simultaneously such as married

couples. Sum assured is payable on the first death and again on the death of survival during the term of the policy. Pension plan: a pension plan or annuity is an investment over a certain number of years but does not provide any life insurance cover. It offers a guaranteed income either for a life or certain period. Unit linked insurance plan: ULIP is a kind of insurance plan which provides life cover as well as return on premium paid over a certain period of time. The investment is denoted as units and represented by the value called as net asset value (NAV).

IRDA (Insurance Regulatory and Development Authority)


The Insurance Act, 1938 had provided for setting up of the Controller of Insurance to act as a strong and powerful supervisory and regulatory authority for insurance. Post nationalization, the role of Controller of Insurance diminished considerably in significance since the Government owned the insurance companies. But the scenario changed with the private and foreign companies foraying in to the insurance sector. This necessitated the need for a strong, independent and autonomous Insurance Regulatory Authority was felt. As the enacting of legislation would have taken time, the then Government constituted through a Government resolution an Interim Insurance Regulatory Authority pending the enactment of a comprehensive legislation. The Insurance Regulatory and Development Authority Act, 1999 is an act to provide for the establishment of an Authority to protect the interests of holders of insurance policies, to regulate, promote and ensure orderly growth of the insurance industry 17 and for matters connected therewith or incidental thereto and further to amend the Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and the General insurance Business (Nationalization) Act, 1972 to end the monopoly of the Life Insurance Corporation of India (for life insurance business) and General Insurance Corporation and its subsidiaries (for general insurance business). The act extends to the whole of India and will come into force on such date as the Central Government may, by notification in the Official Gazette specify. Different dates may be appointed for different provisions of this Act. The Act has defined certain terms; some of the most important ones are as follows:

Appointed day means the date on which the Authority is established under the act. Authority means the established under this Act.

Interim Insurance Regulatory Authority means the Insurance Regulatory Authority set up by the Central Government through Resolution No. 17(2)/ 94-lns-V dated the 23rd January, 1996. Words and expressions used and not defined in this Act but defined in the Insurance Act, 1938 or the Life Insurance Corporation Act, 1956 or the General Insurance Business (Nationalization) Act, 1972 shall have the meanings respectively assigned to them in those Acts. A new definition of "Indian Insurance Company" has been inserted. "Indian insurance company" means any insurer being a company (a) Which is formed and registered under the Companies Act, 1956 (b) In which the aggregate holdings of equity shares by a foreign company, either by itself or

through its subsidiary companies or its nominees, do not exceed twenty-six percent, paid up capital in such Indian insurance company. (c) Whose sole purpose is to carry on life insurance business, general insurance business or re-insurance business? The Authority is a ten member team consisting of (a) A Chairman; (b) five whole-time members; (c) four part-time members, (all appointed by the Government of India)